Question

(e) What is the gross profit for May, June, and July? Goods Inventory at the end of each monti. -s of E15-11 The following are the job cost related accounts for the law firm of ates and their manufacturing equivalents: of the law firm of Colaw Associ- Law Firm Accounts Supplies Salaries and Wages Payable Operating Overhead Service Contracts in Process Cost of Completed Service Contracts Manufacturing Firm Accounts Raw Materials Factory Wages Payable Manufacturing Overhead Work in Process Cost of Goods Sold Cost data for the month of March follow. 1. Purchased supplies on account $1,800. 2. Issued supplies $1,200 (60% direct and 40% indirect). 3. Assigned labor costs based on time cards for the month which indicated labor costs on $70,000 (80% direct and 20% indirect). 4. Operating overhead costs incurred for cash totaled $40,000. 5. Operating overhead is applied at a rate of 90% of direct labor cost. 6. Work completed totaled $75,000. Instructions (a) Journalize the transactions for March. (Omit explanations.) (b) Determine the balance of the Service Contracts in Process account. (Use a T-account.) E15-12 Don Lieberman and Associates, a CPA firm, uses job order costing to capture the costs of its audit jobs. There were no audit jobs in process at the beginning of November. Listed below are data concerning the three audi unts. Direct materia Auditor labor costs Auditor hours Lynn $600 $5,400 72 Brian $400 $6,600 Mike $200 $3,375 88 45 Overhead costs are applied to jobs on the basis of auditor hours, and the predetermined overhead rate is $50 per auditor hour. The Lynn job is the only incomplete job at the end of November. Actual overhead for the month was $11,000. Instructions (a) Determine the cost of each job. (b) Indicate the balance of the Service Contracts in Process account at the end of November (c) Calculate the ending balance of the Operating Overhead account for November. E15-13 Tombert Decorating uses a job order cost system to collect the costs of its interior decorating business. Each client's consultation is treated as a separate job. Overhead is applied to each job based on the number of decorator hours incurred. Listed below data for the current year. Estimated overhead $960,000

Answer 1

Answer-E15-11

Journal Entries

Date	Account Title and Explanation	Debit ($)	Credit ($)
1	Supplies	1,800
	Accounts Payable		1,800
	(To record purchase supplies on account)
2	Service contract in progress ($1,200*60%)	720
	Operating overheads ($1,200*40%)	480
	Supplies		1,200
	(To record for issue of supplies)
3	Service contract in progress ($70,000*80%)	56,000
	Operating overheads ($70,000*20%)	14,000
	Service salaries and wages		70,000
	(To record assigning labor cost)
4	Operating Overhead	40,000
	Cash		40,000
	(To record operating overhead incurred in cash)
5	Service contract in progress ($56,000*90%)	50,400
	Operating Overhead		50,400
	(To record applying operating overhead)
6	Cost of completed service contract	75,000
	Service contract in progress		75,000
	(To record work completed)

Service contracts in process account

Particulars	Amount	Amount	Particulars
Supplies (2)	$720	$75,000	Cost of completed service contracts (6)
Service salaries and wages (3)	$56,000
Operating overhead (5)	$50,400
Ending Balance	$32,120

Answer-E-15-13-

a)

Particulars	Lynn	Brian	Mike
Direct Materials	$600	$400	$200
Direct Labor	$5,400	$6,600	$3,375
Applied Overheads @ $50 Per Hour	$3,600	$4,400	$2,250
Total Job Cost	$9,600	$11,400	$5,825

b) The Lynn job is the only incomplete job at the end of November.

Balance in service Contracts in Process Account = $9,600

c) Calculate Ending Balance of Overhead Account :-

= Actual Overhead - Overhead Applied

= $11,000 - (Total Hours * Rate per hour)

= $11,000 - (205 * $50) or $11,000-($3,600+$4,400+$2,250)

= $11,000 - $10,250

= 750

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